Mortgage protection insurance cover still a valuable asset
- 25TH OCTOBER 2007
If mortgage protection insurance is suitable for your circumstances and you have checked the small print of a policy then it can be a very valuable asset to have if you should find yourself out of work after suffering from an accident, sickness or through unemployment.
Faith in the mortgage protection insurance cover waned when an investigation by the Financial Services Authority began in 2005. After several fines were handed out to some well known high street names for mis-selling payment protection insurance alongside loans, the sector was then referred to the Competition Commission. The inquiry is set to reach completion in February 2009. While there have been some changes for the bette,r the amount of mortgage protection policies that are being sold has dropped, which leave homeowners without a backup plan if they should lose their income.
When bought correctly mortgage protection insurance will begin to provide you with a tax free lump sum every month you have been out of work for between 31 and 90 days depending on the provider. If you go with specialist mortgage protection insurance providers British Insurance then it will payout after 31 days and then continue to give you a tax free income for up to 12 months. This ensures that you are able to repay your mortgage and gives peace of mind that your home isn’t at risk of being repossessed.
Simon Burgess from British Insurance hopes to see the difference between the various payment protection insurance products (ie loan, mortgage and income payment protection insurance) made clearer. He says: “Right now they are not as transparent as they should be and consumers are still confused when it comes to payment protection products. Mortgage protection insurance cover is a very valuable asset as long as you are aware of the key facts and any exclusions in a policy.”
He adds that exclusions could mean that the product isn’t suitable for your circumstances.
Typcial exclusions include being in part time work, suffering from an ingoing illness, being retired or self-employed. Simon warns to shop around for mortgage protection insurance cover and get several quotes for the cover and check the small print of a policy before buying.
